Baroness Gardner of Parkes
To ask Her Majesty’s Government whether they will encourage the letting of residential properties by classifying them as businesses in the same way as holiday lettings.
Baroness Gardner of Parkes
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I remind the House that I have a declared land and property interest in the Register of Lords’ Interests.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the tax system already treats both holiday lettings and residential lettings as businesses. However, furnished holiday lettings can benefit from some of the more generous tax rules for trades. This reflects the fact that they offer extra equipment and services in order to compete with hotels and guesthouses. We have no plans to extend these rules to other property businesses.
Baroness Gardner of Parkes
I thank the Minister for that disappointing reply. Is he not aware that if you have holiday lettings, you can roll over capital gains and therefore there is every encouragement to extend your business, whereas if you are a private residential landlord, you do not have that? Furnished holiday accommodation can only be let to anyone for a maximum of 31 days. Surely there is a desperate need for long-term residential accommodation in this country.
Lord Sassoon
My Lords, I fear that there is more disappointment coming. I had one grandparent who came from the great state of New South Wales and one parent who was educated there, and I thank my noble fellow Australian for her Question. However, the Government have no plans to change the tax or other arrangements for tenancies in the private rented sector. Since the assured shorthold tenancy rules came in in 1988, the private rented sector has grown steadily and responded flexibly to changes in the wider housing market, and some 21 per cent of tenancies now last for five years or more.
Lord Best
My Lords, I declare private and social housing interests, and I commend the suggestions of the noble Baroness, Lady Gardner of Parkes. Does the Minister accept the criticisms coming from many sides of the changes to housing benefit, which we fear will mean a rise in arrears, repossessions and homelessness? Does he accept that some new measures are needed if these housing benefit changes are not to discourage private renting at the lower end of the market, where it is most needed?
Lord Sassoon
My Lords, I am pleased that we have had attention drawn to social housing and housing benefit, because they provide a critical underpinning at the lower end of the residential housing market. Housing benefit will continue at a very substantial level and is a vital part of what comprises the broad housing market that we need in this country.
Lord Rennard
My Lords, does the Minister agree that changes in taxation for private landlords could incentivise them to refurbish and modernise their properties, increase capital gains tax revenues and increase the provision of housing at a time when it is very much needed?
Lord Sassoon
My Lords, we never rule out any suggestions for changes and developments of the tax system, but we have no plans to review taxation in the way that my noble friend has suggested.
Lord Foulkes of Cumnock
My Lords, in the light of the last question, will the Minister clarify whether all the words that he has said today represent the views of both parts of the coalition?
Lord Sassoon
My Lords, what I have said today represents the views of the coalition Government.
Baroness Hollis of Heigham
Following the question of the noble Lord, Lord Best, can the Minister inform the House what the cuts in housing benefit, particularly the cut after 12 months for those on JSA, will do to the private residential letting sector?
Lord Sassoon
My Lords, I am not sure that any assessment of that has been done, but I shall find out and write afterwards.
Lord Clark of Windermere
My Lords, the Question refers to holiday lettings. Is the Minister aware that in many rural areas, especially national parks, where there is a great shortage of housing for local people and many workers’ cottages and former council houses are now used as holiday lets, every holiday let is a house removed from the market for local people?
Lord Sassoon
My Lords, the changes to the taxation arrangements for holiday lettings, on which the Government will consult during the summer, are intended to strike a balance between recognising the important contribution that holiday letting makes to the economy in rural areas and making sure that the tax reliefs available are not principally for wealthy owners of second homes. The changes, on which we will consult, will make sure that the taxation benefit available is more targeted than it was previously.
Lord Anderson of Swansea
My Lords, the Minister said that he is not aware of any assessment having been made of the effect of the changes in housing benefit on the private rented sector. Is it not normal in government to assess the effects of policies before they are introduced?
Lord Sassoon
My Lords, I did not mean to say that no assessment had been made. As I said, I will take back the question, find out what assessment has been made and write on the point.
Lord Myners
My Lords, the Minister clarified in response to a question from my noble friend whether he was answering on behalf of the Conservative Party or the Conservative and Liberal parties. May I suggest that when answering questions in future, Ministers also indicate whether they are speaking in a personal capacity or on behalf of the Government?
Lord Sassoon
My Lords, I cannot quite see what that has to do with the Question. It could take up a lot of time if every time I stood up, I prefaced it by saying that I was speaking on behalf of the coalition Government, but I am happy to do that.
The Earl of Listowel
My Lords, will the Minister keep in mind the many families and children living in overcrowded and unpalatable conditions when he considers what might be done to encourage more private landlords to come into this area and to refurbish this housing?
Lord Sassoon
My Lords, I absolutely take the point that the noble Earl has made. My understanding is that the gap on decency between owner-occupied and rented accommodation has lessened over recent years—and indeed rented accommodation is now on average more energy efficient—so some progress is being made.